Financial Institution Letter FIL-37-2007 Federal Deposit Insurance Corporation May 2, 2007 550 17th Street NW, Washington, D.C. 20429-9990

BANK SECRECY ACT Wolfsberg Group, Clearing House Joint Statement on Payment Message Standards

Summary: The Wolfsberg Group and Association L.L.C. have issued the attached joint statement endorsing measures to enhance the transparency of international wire transfers.

Distribution: Highlights: FDIC-Supervised Banks (Commercial and Savings)

• To promote the effectiveness of global anti- Suggested Routing: and anti-terrorist financing programs, The Wolfsberg Group Chief Executive Officer and The Clearing House Association L.L.C. have announced BSA Compliance Officer a statement for change in international wire transfer practices. Related Topics: Bank Secrecy Act International Wire Transfer • The following actions are endorsed: (1) the creation of a new The Wolfsberg Group or enhanced SWIFT (Society for Worldwide Interbank The Clearing House Financial Telecommunication) payment message format for third-party cover payments; and (2) the adoption of basic Attachments: message standards by the banking industry. . Press Release – Banks Endorse Measures to Enhance Transparency in International Payments . Statement on Payment Message Standards • Four basic payment message standards were developed to enhance transparency of international payments and promote the effectiveness of risk-based programs. Contact: Review Examiner Heather L. Basnett at In a response by the Department of the Treasury regarding [email protected] or (202) 898-3673 • the call for transparency in payment message standards, Under Secretary Stuart Levey stated: “The Treasury Note: Department and federal banking regulators applaud the FDIC financial institution letters (FILs) may be accessed from the FDIC's Web site at groups' proactive efforts, and encourage financial institutions www.fdic.gov/news/news/financial/2007/index.html. worldwide to take steps to adopt this robust proposal. In turn, we pledge to work with our international counterparts to help To receive FILs electronically, please visit bolster support for the initiative as we continue our joint effort http://www.fdic.gov/about/subscriptions/fil.html. with the industry to develop standards to strengthen the

Paper copies of FDIC financial institution letters financial system." Under Secretary Levey’s statement can be may be obtained through the FDIC's Public found at: https://www.ustreas.gov/press/releases/hp364.htm Information Center, 3501 Fairfax Drive, Room E- 1002, Arlington, VA 22226 (1-877 275-3342 or 703- • The Wolfsberg Group is an association of 12 global banks 562-2200). whose aim is to develop financial services industry standards

and related products for , Anti-Money Laundering and Counter Terrorist Financing policies. The Clearing House Association LLC is owned by the U.S. affiliates of 22 banks and was established to simplify the exchange of checks and improve the efficiency of the payments system. It includes industry forums to discuss and take action on issues critical to its owners.

For Immediate Release

PRESS RELEASE

Banks Endorse Measures to Enhance Transparency in International Payments

New York – April 19, 2007 – The Wolfsberg Group and The Clearing House Association L.L.C. today issued a statement endorsing measures to enhance the transparency of international wire transfers to promote the effectiveness of global anti-money laundering and anti-terrorist financing programs. The measures include both the development of an enhanced payment message format, which would include more detailed information about those conducting wire transfers in certain instances, as well as calling for the global adoption of basic messaging principles aimed at promoting good practice with respect to the payment system.

Over the last 30 years, the world’s banks have developed an efficient and effective international payment system. The smooth functioning of this system is vital to global financial stability. The steps outlined above will both better protect the integrity of the system and help ensure its continued efficient functioning.

With the support of the global regulatory community and subject to acceptance by the membership of the Society for Worldwide Interbank Financial Telecommunication (SWIFT), the co-operative supplying secure standardized messaging services and interface software, it is anticipated that an enhanced payment message format will be developed.

The statement, including the messaging principles, is available on www.wolfsberg-principles.com

Members of the Wolfsberg Group are ABN AMRO, Central Hispano, Bank of Tokyo – Mitsubishi UFJ, , , , , , HSBC, JPMorgan Chase, Société Générale, and UBS.

Members of The Clearing House Association L.L.C. are , National Association; The Bank of New York; Citibank, N.A.; Deutsche Bank Trust Company Americas; HSBC Bank USA, National Association; JPMorgan Chase Bank, National Association; LaSalle Bank, National Association; UBS AG; U.S. Bank National Association; Wachovia Bank, National Association; and Wells Fargo Bank, National Association.

Media contact: For the Wolfsberg Group David Bagley, Co-Chair, davidbagley@.com, (44) (20) 7991 8645 Philipp von Turk, Co-Chair, [email protected], Telephone: 212.464-1226

Media contact: For The Clearing House Association L.L.C. Greg Berardi, Office: 415.239.7826, Mobile: 415.672.2377, [email protected] Chip Savidge, Office: 212.613.9896, Mobile: 917.576.0957, [email protected]

Wolfsberg Group, Clearing House Statement on Payment Message Standards April 19, 2007

Statement on Payment Message Standards

We endorse the following actions to enhance transparency regarding parties to transactions in international payments. These actions will promote the effectiveness of risk- based programs designed to reduce vulnerabilities associated with financial intermediation and enable banks to avoid the use of their facilities by individuals and organizations that the banks would not accept as their own customers, including, most particularly, those engaged in money laundering, terrorist financing or transactions in violation of relevant sanctions.

These actions are: (i) the creation of a new or enhanced SWIFT payment message format for third-party cover payments that enables information regarding the originator and the beneficiary to be included; and (ii) the adoption of certain basic payment message standards within the banking industry.

With the support of the global regulatory community, and assuming acceptance by the

SWIFT membership, it is anticipated that an appropriate message format change could be implemented as early as November 2008.

The four payment message standards that should be observed by all financial institutions are:

– Financial institutions should not omit, delete or alter information in payment messages or orders for the purpose of avoiding detection of that information by any other financial institution in the payment process.

– Financial institutions should not use any particular payment message for the purpose of avoiding detection of information by any other financial institution in the payment process.

– Subject to all applicable laws, financial institutions should cooperate as fully as practicable with other financial institutions in the payment process when requested to provide information about the parties involved.

– Financial institutions should strongly encourage their correspondent banks to observe these principles.

Wolfsberg Group, Clearing House Statement on Payment Message Standards April 19, 2007 2

The major financial institutions that have developed and will observe these standards will also strongly encourage their correspondent banks to observe them. To be successful, however, this initiative must necessarily involve the public and private sectors. The effectiveness of these standards requires adherence by the financial institutions originating payment messages and encouragement of their adherence by their regulators.